Liabilities in simple terms mean, how the business has raised the capital.
Assets mean how the capital has been used by the business.
Invested Capital = Assets + Working Capital - Cash - Non-Operating Assets (like mutual fund investments)
EBIT should also exclude income from non-operating assets.
What does this mean? buy and sell, on same price, same quantity
AMCs have multiple funds. One fund selling to another fund of the same Fund house. This seems the most logical explaination as per me.
@Ferrari1976 I am trying to calculate these numbers Division wise. I dont think they have shared Working capital numbers. Can you please help me with the calculation steps for any one division.
You cannon calculate the exact working capital unless you have segment wise current assets and liabilities, but you can certainly make some assumptions to determine a logical value. For e.g. distribute the WC by revenue of various segments. If there are more companies in the same business, use the WC to revenue ratio of such companies to determine the WC of the Segment.
Essentially such calculations may not always be possible from the data at hand but a close approximation can certainly be calculated based on some deeper analysis.
If ROE < profit growth, then to sustain the profit growth the company has to either take debt or dilute the equity. I have heard something on the similar lines.
Can someone help me understand it mathematically?
Please take the examples of turnaround and one normal company.
Lets say invested equity is 100. ROE = 10, Profit = 10.
Assuming all profit is re-invested in the company and ROE remains constant:
Next year, invested equity = 100 + 10, ROE = 10, Profit = 11
Thus, with all profit being re-invested, the maximum additional profit that the company can generate is equal to Profit * ROE
Hence:
Profit Growth % = ROE
To generate additional profit, the company needs additional capital, either debt or equity.
Realistically, it is never this easy.
For example what is stopping a company (in terms of legality) from issuing a truckload of esops?
What does Premium Paid on Redemption of Preference Shares mean? Additionally, it says in the footnotes that 5% is Non-convertible Non-cumulative ( What does 5% mean here ? Is it 5% of total preference share). : Source → Annual Report of Sportking (Page : 121)
If a Preference share is redeemed why is preference equity remain the same (page 108)
Is anyone attending tamilnadu investing conference now. ?
My sincerely apologies for spamming.Sorry
Will delete this post tonight.
When Preference Shares are redeemed at a price more than its face value or the par value, then it is said that the debentures are redeemed at a premium.
The amount of dividend paid on a preference share is usually expressed as a percentage of nominal value. So, a 5% preference share with a nominal value of Rs. 10 will pay an annual dividend of Rs. 0.5 every year - unless reserves/profits are insufficient.
Non-Cumulative Preference shares don’t accumulate dividends. So, if a company generates a loss in a particular year, the outstanding dividends can not be claimed by shareholders from future profits.
One Question - Can a shareholder request company to share names of top 100 shareholders and is it mandatory for company to share that or they can refuse? Alse is there any other source also which can provide this information?
This might help:
Hi,
I have a very basic question which I’m not able to wrap my head around. Would love to get your thoughts
Would you buy a company that has gone up 4x this year considering at current price also the company fundamentals are in place e.g. Shilchar Tech
Would love to understand your thought process while evaluating such a situation
All companies which have been 100 bagger, has to be first 4 bagger before becoming 100 bagger. Now if this company is in that league, that you need to think about. Nobody can predict what will happen in future. But you can keep following its business fundamentals.
I would always look for stocks that appear undervalued, either intrinsically or relatively. Since in the given scenario the stock has risen by 400%, there certainly would be a substantial reduction of undervaluation. For such a jump, there needs to be some fundamental change in the business and I would like to ascertain the reason. If still at the current price the stock looks undervalued then I would not be averse to invest.
In trading, for a trader there is a benefit of earning quick money (with limited capital)… Through that money one can invest in stocks. How an investor can build earn good returns with limited capital.
If through portfolio allocation? Then how?
Earning money through trading and then investing is a bad idea. One should have a full time or part time proper job or business where substantial money is earned. And through that active income, one should invest.
Investing is a long term endeavor, so limited capital could be a deterrent, it pulls back. Even if we belong to a particular school of thought, practice a particular style of investing, say value investing, we will have to wait for extended periods of time for our investments to become profitable, and in the meanwhile, if we continue our learning, we may think that we have other opportunities, and we should exit our previous bets, and if those bets are in losses, we will have to book losses and move our capital to new found bets, if we are convinced our new bets will yield more results, and if we don’t want to sell at a loss, we will need more capital for new bets.
If you are a new investor, and have limited capital, you can focus on your profession, climb the ladder, earn more, and in the meanwhile learn and practice with small capital, and as and when your knowledge and experience grow, you can allocate more.
Trading, while can be done with limited capital, is more loss making, because every trade comes with a stop loss, so there will be eve lesser capital if all trades go into losses. And if we don’t want to sell at a loss, then we can lose more. Capital is more important here, than investing, as each trade is independent of the previous trades.
In a sense, investing and trading go hand in hand, they can complement each other, knowledge and experience gained with one will help doing other.
Just some thoughts, I do some of both.
Trading has the benefit of leverage over Investing but comes with its own drawbacks: 1) increased cost due to leverage and frequency of positions. 2) Higher and regular tax on the profits (if any). 3) Lesser number of stocks available for leveraged trading & particularly fewer small caps. 4) Difficulty in scaling up trading in really big way.
